UAE tax authorities increase inspections by 81% in 2023
The tax authorities in the United Arab Emirates (UAE) carried out 81% more tax inspections in 2023 compared with the previous year, according to the latest figures from the Federal Tax Authority (FTA)
The FTA conducted more than 39,000 visits across the country last year, which is said demonstrates “the UAE’s commitment to combating tax evasion and protecting consumers”.
The FTA’s increased efforts to ensure tax compliance, monitor taxpayer adherence to tax legislation, and prevent commercial fraud resulted in the seizure of over 21 million units of non-compliant tobacco products and 2.45 million units of other excise goods.
Director General of the FTA, Khalid Ali Al Bustani, said that “the authority is working to enhance tax awareness and encourages taxpayers to self-comply with tax laws and regulations”.
The FTA’s inspection operations rely on various field and electronic supervisory mechanisms to prevent the sale, trade, or storage of non-compliant products. The ‘Marking Tobacco and Tobacco Products Scheme’ has been instrumental in this effort, using Digital Tax Stamps to verify tax compliance.
He said the FTA has established strategic partnerships with government and private sector entities, contributing to the successful implementation of the tax system. These partnerships have raised tax awareness among business sectors and consumers, resulting in increased compliance in the markets, he added.
The 2023 inspection campaigns revealed a 79% increase in compliant establishments, with 4,390 non-compliant establishments identified. The FTA issued 1,150 registration notices to non-registered and non-compliant establishments, a 72.31% increase from 2022.
UAE businesses negatively impacted by flooding
Business activity in the UAE’s non-oil sector grew further in April, according to S&P Global latest survey. However, demand for new orders slumped due to the impact of the country’s worst flooding in 75 years (since records began).
David Owen, senior economist at S&P Global Market Intelligence, said: “April data highlighted strong overall growth across the UAE non-oil private sector as buoyant domestic economic conditions helped to support long-term business expansion plans.
“However, the latest survey signalled a sharp slowdown in new business gains in the wake of heavy rainfall and flooding.”
The seasonally adjusted S&P Global UAE Purchasing Managers’ Index (PMI) dropped to 55.3 in April, the lowest reading since August 2023, and further eased from 56.9 in March, but remained above the 50.0 mark, which signals growth in activity.
S&P Global’s survey showed new sales grew at the slowest pace since February 2023 with the new order index at 56.0 in April, down from 61.5 the previous month as the heavy rainfall disrupted operations and hampered sales, the study shows.
Respondents in the survey cited robust domestic economic conditions and the fruition of long-term business expansion plans, alongside competitive pricing strategies.
Furthermore, optimism regarding prospects for business activity growth in the year ahead remained highly upbeat in April, despite softening to a three-month low.
Non-oil GDP represents about 74% of the UAE’s overall GDP.
Earlier this year, S&P Global predicted that the UAE’s gross domestic product (GDP) would grow by 5% in 2024, exceeding the 2.8%.
“While the global economy remained subdued operating at subpar growth levels, we estimate that UAE GDP expanded at more than 3 per cent in 2023, including close to 6 per cent growth for the non-oil sector,” Tatiana Leskova, associate director of Corporate Ratings at S&P Global, told the Emirates News Agency.
The rating agency is projecting continued strong momentum in Dubai’s hospitality, wholesale and retail, and financial services sectors to drive growth in 2024/25.
Leskova said the UAE – and Dubai more specifically – have remained relatively immune to the global economic headwinds, thanks to the limited sensitivity to interest rates and contained inflation.
Despite higher interest rates, the number of mortgage transactions continued to grow in Dubai, where over 80% of real estate transactions are completed on a cash basis.
